Echoing our first event of the year, but in a non-luxury specific framework, Sciences Po organized on 2 July a round table on the theme ‘Communication Director: what future?’. Considering the success of our meeting in February, it seemed interesting to post a brief summary of the discussion.

Speakers

The roundtable gathered

Louise Beveridge, Director of Communication at Kering and member of the Group Executive Committee,
Elisabeth Coutureau (CRH 00), President of the Corporate Delegation of the AACC and Co-President of CLAI,
Béatrice Mandine, Executive Director in charge of brand & communication – Orange Group
Laurent Sacchi (SP 87), Deputy Director at the Presidency in charge of communications, public affairs and crisis management for Danone.

The BCG Observatory – Science-Po-Stratégies magazine

Prior to the debate there was a short presentation by Olivier Abtan – Partner at Boston Consulting Group who shared with the audience the results of a barometer conducted by the BCG for Sciences-Po in partnership with Stratégies magazine (based on interviews with 400 directors of communication).

This study highlights the strategic importance of the function with 70% of respondents who are on the executive Comittee. If the strategic importance of the function appears to be essential and will be most probably be further enhanced, it doesn’t mean that the operational side of it is absent. Quite the contrary, priorities of the communication directors such as they describe them are rather operational (control of communication activities, design of communication tools come first), and the balance between these two poles seems to be hard to reach. Moreover, they are the front line on digital issues, with a specificity for the current generation: they are mostly not ‘digital natives’, and therefore they need to rely on their team’s competence or, in many cases, bring in external expertise. Digital is also the only budget that is on the rise, even if the majority of communication directors have doubts about the effectiveness of their strategy with an average score of 6/10.

This digital transformation changes the job’s tempo which is accelerating, posing three major challenges to the industry players: the need to be always informed about the latest technologies, innovations, media, etc …, to have the right skills on board, and finally the necessity to define the metrics that will allow to evaluate the effectiveness of communication campaigns in a fast moving environment.

The tension strategy/operational

The discussion initially focused on the tension between strategy and operational and the three speakers agreed on the fact that there is not necessary a conflict between strategic vision and operational actions. The strategy sets the course (so it is a medium/long term timeframe) then one has to manage the day to day. Having set an objective allows to sometimes seize the opportunities arising from unexpected events.

For Béatrice Mandine who recently had to manage Orange crisis communication, communication directors have to love the unexpected, it’s part of their job: it is then necessary for them to follow the roadmap while adapting to exceptional circumstances. By detailing the recent crisis with Israel, she has shown how great the challenge is when the information that is nowadays spreading very quickly is not consistent with the reality of the situation and of the message originally issued. Obviously she loves this kind of challenge!

Did the digital change the Communication Director’s job?

It is emphasized that what changed the digital is that tow third of the contents in relation with corporations are produced by outsiders and, what could be perceived as a loss of power by communication directors, strengthens their role in the end.

For Louise Beveridge, For Louise Beveridge, digital is not responsible for the evolution of the job that is the result of greater openness, a reinforced dialog between the company and its customers and other parties. Digital can greatly enrich the content of this dialog, and if the issue of ‘contents’ is laid it is because the role of communication is to find the balance between what can be published and what cannot. Indeed, we have moved from a ‘shareholder’ to a ‘stakeholder’ economy; this means that it is but success needs to be found in other areas such as social, cultural, environmental,… areas as well.
In this context, the communications director acts as the warrantor of the meaning of corporate communications and plays role of the orchestra conductor with all concerned parties, and this has strengthened its power. Louise Beveridge used the sports metaphor to say that the communication director is a midfielder who can be both offensive and defensive, but in all cases is the one who passes the ball.

What about the structures?

For Beatrice Mandine, digital destroyed silos, it has raised awareness of the need to change organizations. Regarding Orange, the ‘Division of Digital’ has been abandoned in favor of two defined units according to the time dimension attached to them:

• The “warm” time, concerning immediacy, typically press relations unit, the service also manages everything related to social media.

• The “lukewarm” or “cold” time, longer time, which manages the image, website, etc …

Kering also formed two poles so quite similar:

• Information: Press, journalists, social networks like LinkedIn, Twitter

• Image: branding, events, website, ‘image’ social networks (Facebook, Instagram, …)

Louise Beveridge insists on the fact that if the structure is vertical, intelligence is played horizontally, and the teams meet on projects that they manage jointly.

Elisabeth Coutureau

The management of the CEO image

For Louise Beveridge, François-Henri Pinault is the spokesperson, the flag bearer of Kering group. The question is to assess the relevance of an intervention (media, conference …)and its interest in the context of limited time resource. It is therefore the management of scarcity, a concept very much in line with luxury …

Laurent Sacchi, for Danone, also evokes the question of dosage. With three leaders in 50 years, the group demonstrated a great stability, and the image of its leader is built in the long run. So for him the question is to assess the context in which the CEO is lead to speak, what may be said, and the choice is to speak only when the leader can avoid jargon (but he confesses that is sometimes necessary to speak even if in a constrained framework).

Finally at Orange, no one ignores that Stephane Richard has a strong personality, the communication director has to manage the positive of this personality and what is less positive. But the company policy is to avoid too much personalization by regularly putting forward other executives to promote the image of a managerial team, and more globally of team work that is very much at the heart of the company’s strategy.

Measuring the performance

From the outset, Laurent Sacchi declares himself strongly opposed to the ROI obsession. He explains that communication has the ultimate goal to change attitudes and behaviors and that these changes are not instantaneous, therefore the success of communication cannot be measured in the short term, but over time.

Beatrice Mandine is more nuanced. For her, the virtue of KPIs is to provide facts in order to discuss actions that can otherwise give way to irrational judgments. Louise Beveridge has actually some doubts about the usefulness of KPIs, but emphasizes that social networks may allow to assess the relevance of an action in real time.
Elisabeth Coutureau evokes traditional indicators (including the valuation of the space equivalent) that have become completely obsolete in the digital context; for her there exists some indicators to be kept, specifically those measuring engagement, but the question of indicators is above all the one of the objectives assigned to communication and this is why they cannot be totally overlooked.

Catherine Jubin

For download the BCG presentation, click on “read more”

1 – 20 years ago, Value Retail launched a concept tailored for luxury brands, wishing to optimize their inventory management. Today, Value Retail manages 10 villages following this model in Europe and more recently in China, including “La Vallée Village” near Paris. Do these villages host very different customers’ origin and profiles according to countries? Does the selection of brands differ from one country to another?

Since its creation, Value Retail’ mission has always been to be servicing luxury brands and to create prime international touristic locations in Europe, and more recently in China.

The sociologist Gabriel Tarde (1842-1904) observed as early as the 19th century that «the social destiny of inventions insofar as they address the regular needs of humanity is thus to begin as luxuries, meaning that they are imitated by a restricted group prior to continued imitation which leads them to be distributed in forms that are commonplace, or even necessities, to increasingly large groups of people».

If the phone was a luxury for many until the turn of the 60s, then the mobile phone in the 80/90 years, today it is no longer the case and the battle raging in the smartphone market illustrates the luxury paradigm shift. With the first device launched by Motorola, the mobile phone segment is 30 years old; in three decades it has experienced an exponential pace of innovation to integrate more and more functions into increasingly lightweight devices. Its historical brands, Motorola and Nokia, have missed the shift toward smartphones, and have given way to market leaders Apple and Samsung in the late 2000s.

In the meantime, many initiatives have emerged to occupy the segment of “premium” telephony. Nokia had based its strategy on launching a specific brand: Vertu. The phone borrows luxury codes, combining fine materials and design while adding to the device an exclusive services offer, including a luxury concierge service. The result: a high quality product, but rather heavy, and which claimed sustainability does not necessarily match the permanent technological changes taking place on this segment. Other business models also appeared such as the ‘Atelier de Haute Communication’ signing partnerships with Luxury brands (Dior, Versace and Tag Heuer) in order to offer branded phones, as others are creating branded sun glasses. But if the phone is certainly an accessory, it is primarily a technological product and the legitimacy of a luxury brand appears slim on that territory where technical characteristics dictate the client’s choice. So it seems that this model was doomed to remain marginal.

In the early 2010, Samsung and Apple (new on this segment in 2007), which are waging a fierce war, including in the legal field, embarked on a strategy of ‘premiumization’: growing attention to design, higher price positioning of their new products (over € 1,000.00 per unit) and work on the brand image. The latest Samsung campaign allows understanding the brand strategy to those who would not have noticed it; the brand which gained a technological legitimacy long ago, claims a fashion and glamour positioning. Meanwhile, Apple is regularly hiring luxury experienced leaders (Angela Ahrendts, Paul Denève …).

In short, the mobile phone market, which has not kept its exclusivity for very long, is structured today around two axes: technology and price level. The “Premium segment” is for Apple and Samsung and the “access segment” for Chinese brands such as Huawei and Xiaomi. For those who are attached to owning a unique object, another offer appears, replacing licenses, allowing the consumer to customize its latest toy. This offer is also segmented: some play on the mass and offer ‘covers’ which designs go from the most basic to the most sophisticated collaborations with premium brands (Swarovski, Jean-Paul Gaultier, …) and finally the founder of Atelier Haute Communication has opted for a much more upscale offer, with a “craft” customization applying to Samsung and Apple brands: fine leathers, noble materials …It allows his clients to benefit from a unique product while enjoying the best of technology.

What can we learn from the history of this segment, briefly summarized here?

• Brand stretching has its limits, those imposed by the legitimacy of the brand in a sector other than its original one. Traditional luxury/fashion brands did not have much legitimacy on the telephony segment.

• In 30 years, we have witnessed the emergence of a new market going through different phases, and today it tends to look like any consumer goods segment: the entry-level (mostly made in China) occupying the field of accessibility; middle-range brands and products struggling to emerge with a clear identity (Sony, HTC,…); a top-range occupied by brands with strong identities.

• Unlike the traditional luxury segment, the brand’s seniority in the segment is not necessarily an advantage to claim the highest position, but it is its ability to offer technological breakthrough that has made a brand such as Apple able to take the leadership even if it was new to the segment.

• However, as indicated by Bruno Remaury*, to become and remain a luxury brand, you need a rich brand story telling. With this regard, Apple has an advantage that no other technology brand possesses: the legend of Steve Jobs, his creative genius, his famous ‘Keynotes, … Furthermore, Apple understood early on the importance of the distribution and service issues and created a standard from which many of the luxury brands should learn. It has become an iconic brand, which for many is also a luxury brand. Indeed, in quite a few countries Apple appears in the top 10 brands spontaneously associated with luxury (India: Apple ranks 8th for 18-29; UK: Apple ranks 9th for 18-34 years; Brazil: Apple ranks 10th; Hong Kong: Apple ranks 10th) – (Source World Luxury Tracking 2013-2014)

• Samsung, which does not have this narrative wealth and appears to be a veteran on this segment where it operates since 1991 (Apple since 2007), seems to have understood it had to claim a different positioning. The brand draws on the Korean dynamics and its undeniable talent in the design field a different kind of legitimacy and its strategy is to increasingly position itself as a “glamour” and fashion brand (presence at the Oscars in 2014, advertising campaigns, product placement in movies, …). It may become ‘premium’ in the consumers’ mind, but it would probably be harder to claim itself as luxury brand, especially as Samsung does not seem very interested in developing high quality retail and service, so dear to Apple.

To sum up, if it is innovation that has allowed Apple to such a special position on this segment, the perpetual race for novelty between its players leads to very ephemeral products. This raises the question of price elasticity, because even if the latest smartphone is an accessory, in the consumer’s mind it will probably never be equivalent to a Hermes bag or a Patek Philippe watch. In the long run, will brands today occupying the high-end of this market be able to impose price levels disconnected from the real added-value of the device? And the question becomes to know whether mobile telephony will durably remain a player of the luxury segment …

Catherine Jubin